The FCC Must Monitor State Regulation of Pole Attachments to Further Broadband Deployment

Pole attachments are attracting increased attention because of their importance to promoting the deployment of broadband facilities, including those financed by the Broadband Equity, Access, and Deployment (BEAD) program. As part of BEAD’s efforts to expand broadband coverage into all unserved and underserved areas, providers will have to obtain approval to work on millions of poles. The time and cost associated with this task will have a large effect on a project’s success in bringing Internet coverage to new households.

Last week the FCC’s Wireless Competition Bureau issued a Public Notice and Press Release regarding state regulation of pole attachments. The Notice informed states of their responsibilities for state regulation. These include:

•     Issuing rules and regulations implementing the state’s regulatory authority.
• Regulating rates, terms, and conditions of pole attachments.
• Establishing procedures for resolving disputes.

The Notice also requested public comments on how the FCC should ensure that state regulation is effective. This includes whether the Commission has a duty to review state certifications to ensure the regulatory regime is adequate to meet the requirements of the Communications Act of 1934. The FCC also seeks comments on what else it can do to ensure that attachers in state-regulated states are not subject to unnecessary costs and delay.

As I wrote in a previous blog, ownership and regulation of poles is not always straightforward. According to one study and analysis, pole regulation is “scattershot” and “highly fragmented.” Poles are owned by a number of different entities including utilities, local exchange companies, and government entities. Poles in many states are regulated by states, not the federal government.

The FCC regulates most poles under Section 224 of the Communications Act of 1934. Its rules lay out processes and timelines for attachers and pole owners when the former seek to attach communications infrastructure to poles. However, the provision gives states the option of “reverse-preemption” by certifying that they will regulate pole attachments in their state. As of now, 23 states and the District of Columbia have taken this option.

The FCC’s Notice is important because pole attachments can have a large impact on project cost and completion. According to the above study, BEAD-funded projects will touch an estimated 3,954,030 utility-owned poles across 2,053 electric utility service territories. Current plans are for aerial fiber to cover 188,287 miles. Pole-related costs for BEAD projects could range from $534 million to $4.63 billion. The authors find that many of the poles involved are not regulated by the FCC. It is clear that the availability of pole attachments on reasonable terms is important to furthering broadband deployment.

The Commission also seeks information on how it can improve the regulation of pole attachments in the states that have chosen to regulate attachments themselves. One way is to ensure that any adjudications are timely and effective. Delays in obtaining permits can have a significant impact on the cost and even viability of broadband deployments, including BEAD projects. This request is timely given the history of the dispute between Comcast and Appalachian Power Company. Appalachian Power sought to charge Comcast for the full replacement cost of damaged poles even when a portion of the damage was caused by third parties. Comcast demurred. The FCC quickly issued a judgment favoring Comcast. However, several months later the dispute is still delaying work. Both parties have filed documents alleging that the other party is not abiding by the judgment. Rulings that come late or that cannot be enforced will do little to address the problem.

Another possibility is to allow non-deployment BEAD funds to be used to give states the resources they need to provide effective permitting. BEAD funding represents a huge increase in the effort to extend Internet coverage. As the FCC notes, increased investment has led to extensive new deployments in recent years, resulting in a significant increase in pole attachment applications for large numbers of utility poles. Many states and localities may lack the personnel and experience needed to deal with this sudden increase in volume.

In conclusion, the FCC is wise to focus on the issue of state regulation. State rules should be essentially equivalent to FCC regulations to ensure that attachers in reverse-preemption states do not experience prolonged delays and unreasonable costs. As the Notice says: “[S]tate pole attachment regulation can either advance [ubiquitous deployment of next-generation broadband] through clear and effective rules or become a roadblock to such deployment if a state adopts a pole attachment regime that is incomplete or unclear or fails to adopt pole attachment regulations in the first instance.”

Broadband availability is closely linked to economic growth in a particular area. It benefits everyone when the regulatory reviews needed to effect deployment speed this benefit rather than delay it.

Do Pole Attachment Issues Threaten BEAD Projects?

On May 12 researchers Alex Karras and Michael Santorelli of the Advanced Communications Law & Policy Institute at New York Law School published a report and analysis of the cost of getting access to utility-owned poles as part of the deployment costs under the historic Broadband Equity, Access, and Deployment (BEAD) Program. The bottom line is that projects funded by BEAD are expected to lay 188,287 miles of aerial fiber on 3.9 million poles within 2,053 separate electric utility service territories. Using rough estimates, the estimated pole costs that BEAD contractors will have to pay in order to attach to poles range from $534 million to $4.63 billion nationwide.

Every BEAD deployment contractor had to estimate actual pole attachment costs as part of the application process. The study’s authors were not trying to duplicate these estimates. However, the range of estimates could be a sign that actual costs will vary widely. In a situation where contractors are facing tight deadlines and where actual costs are uncertain, pole attachment issues could become the focus of a lot of deployment problems. Coming on top of a renewed legal battle between Comcast and Appalachian Power Company, the large range of attachment prices shows that there is tremendous room for disagreement between broadband contractors and pole owners.

 

According to the report, pole ownership and regulation follow a “scattershot” approach. Electric cooperatives play a disproportionate role. Although they only serve 13% of electric customers, about 40% of BEAD aerial fiber will be deployed across their territories. The FCC has jurisdiction over poles owned by investor-owned electric utilities (IOUs) in 27 states. In the other 23 states, IOU poles are regulated by state public utility commissions. Regulation of poles owned by cooperatives and municipal electric utilities differs among states. The authors speculate that: “[i]n states where cooperatives and municipal electric utilities are unregulated, there are few guardrails in place to provide predictability and consistency in how pole-related costs are set, increasing the chances that BEAD subgrantees could encounter higher-than-expected pole fees from these entities.”

Electric utility pole issues have a significant effect on broadband deployment. The National Telecommunications and Information Administration (NTIA) has tried to address regulatory problems by extending the reach of the FCC’s rules. The FCC recently showed its willingness to act quickly in resolving pole disputes by expediting its decision in a dispute between Comcast and Appalachian Power Company. Comcast alleged that Appalachian Power was charging it for pole damage that was caused by third parties. The Commission ruled that Appalachian Power could only charge Comcast for the incremental cost of its project.

However, Comcast recently approached the Commission complaining that Appalachian Power was refusing to abide by its ruling. Thus, it remains to be seen whether tougher action by the FCC or NTIA will translate into a quicker, less contentious process that lowers cost or whether it leads to a rise in litigation that slows everything down.

Using a variety of independent studies, the researchers chose low, medium, and high estimates of pole costs depending on whether a pole just needs equipment added or whether it needs replacement. Their estimates are limited to electric utility-owned poles, which constitute about 70% of the total. Including all poles would raise the price significantly. The estimates for the cost per touched pole were $75 (low), $175 (base), and $450 (high). The estimates for the percentage of poles that will have to be replaced were 3% (low), 4% (base), and 8% (high). Finally, the estimates for the cost of replacing a pole were $2,000 (low), $3,500 (base), and $9,000 (high). Using the base assumptions produced an estimate of $1.25 billion or roughly 6 percent of BEAD deployment funds. The boundary estimates were $534 million (low) and $463 billion (high). This leaves a lot of room for disagreement between BEAD contractors and pole owners.

What can be done? The NTIA requires cooperatives and municipal utilities that participate in the BEAD program as subgrantees to comply with FCC pole attachment rules as a condition of accepting BEAD funding. The rules cap rates and charges that pole owners can impose on contractors. They also create timelines for processing applications and require regular progress reports. The authors also advocate letting states use some of the remaining $21 billion in nondeployment BEAD money to offset unexpected pole attachment costs. They point to successful models in Texas and North Carolina as good examples. State regulators could also rationalize pole issues as well as the accompanying permitting, rights of way, and easement issues that accompany them.

With proper policies in place, broadband providers around the country will soon be engaged in a major deployment effort to significantly expand coverage to unserved and underserved areas. In a project of this scope, problems are inevitable. But many of these problems, including pole attachments, can be managed better if regulators and broadband providers perform proper due diligence, build strong relationships, and create transparent, predicable processes.

The FCC's New RBAT

As reported by Christopher Cole in Law360 [subscription required], the FCC has launched a "rapid response team" to help resolve disputes between utility pole owners and broadband Internet service providers regarding the cost of upgrading or replacing poles to allow the attachment of the ISPs' broadband equipment. The official name of the new unit is "Rapid Broadband Assessment Team" or "RBAT."

According to the FCC's Enforcement Bureau Notice:

"The RBAT is charged with prioritizing and expediting the resolution of pole attachment disputes that are impeding or delaying the deployment of broadband facilities and providing coordinated review and assessment of those disputes. The RBAT will swiftly engage stakeholders, gather essential information, and distill issues in dispute. It will then provide guidance and advice to parties on the most effective means of resolving their dispute including, but not limited to, RBAT-supervised mediation. The RBAT also may decide if a complaint (or portion of a complaint) is suitable for placement on the FCC’s Accelerated Docket based on consideration of specified criteria."

The inter-agency RBAT is supposedly staffed with experts regarding the FCC's pole attachment rules.

Pole attachments are an integral part of the overall infrastructure to facilitate the deployment of high-speed broadband networks, and, obviously, speedy resolution of pole attachment disputes is important in deploying broadband sooner rather than later.

It's good that the FCC has taken this step to establish the RBAT. And it's good to know that the RBAT is staffed by experts.

But what's also needed is the will to make the RBAT effective, especially with respect to rapid action. As they say, the proof will be in the RBAT pudding.

CTIA Once Again Asks FCC to Declare that Light Poles Are "Poles"

In a letter dated June 7, 2024, CTIA urges the Commission to at long last clarify that the term "pole" in Section 224 of the Communications Act encompasses both utility poles and light poles. Doing so, it argues, will "bring uniformity to the pole attachment and broadband deployment processes leading to more and faster broadband being available to more people."

In a 2019 Petition for Declaratory Ruling, CTIA asked the FCC, among other things, to "declare that the term 'pole' in Section 224 includes light poles and that utilities must afford nondiscriminatory access to light poles on rates, terms and conditions consistent with Section 244 and the Commission's implementing pole attachment rules."

And while the Wireline Competition Bureau did issue a Declaratory Ruling in July 2020 addressing other aspects of CTIA's petition, it sidestepped this particular topic, writing in a footnote that "[w]e do not address CTIA's request concerning light poles in this Declaratory Ruling, and this issue remains pending."

In light of rapidly growing demand for 5G, including fixed wireless access home broadband, CTIA once again is seeking clarification from the FCC that the reference in Section 224(f)(1) to "any pole, duct, conduit, or right-of-way owned or controlled by" a utility includes light poles.

Light poles and other "street furniture," it turns out, are "well-suited" for the attachment of small cells, which are predicted to make up more than 80 percent of infrastructure deployments going forward. This is especially true in areas where power lines are buried underground and, consequently, utility poles are not available.

Given the current uncertainty, however, CTIA reports that "wireless providers that have sought access to light poles have faced opposition from electric utilities, including flat denials of access, as well as attachment charges that exceed lawful rates." A ruling by the Commission that "any pole" includes a light pole, it maintains, "will serve the public interest by preventing disputes with electric utilities over this issue, thereby removing barriers to wireless deployment."

PRESS RELEASE: FSF President Randolph May Commends FCC's Proposed Pole Attachment Rulemaking

 

 

The following statement may be attributed to Free State Foundation President Randolph May:

 

“I am pleased the FCC has proposed to begin a new rulemaking proceeding seeking comment on questions concerning the allocation of pole replacement costs and the resolution of pole attachment disputes. FSF filed comments in September 2020 urging the FCC to begin such a proceeding, and it is important that the agency now do so and complete it in an expeditious manner.

 

As we said in our earlier comments urging Commission action, issues surrounding pole attachments 'are increasingly important and quickly resolving them in a pro-deployment, pro-consumer way can make a real difference.’ The reality is that pole attachments are a critical component of the infrastructure that supports more ubiquitous broadband deployment. Unless the costs of pole replacements are equitably apportioned so that would-be attachers are not charged above-market rates, and an efficient process is put in place to quickly resolve disputes, then overall broadband deployment to currently unserved areas will be slowed. This is a problem at any time, but especially now that the federal government is disbursing massive amounts of money in efforts to close digital divides, including in presently unserved rural areas.

 

So I urge the Commission to initiate the proposed rulemaking proceeding and to complete it in an expeditious manner."

 

New Study Quantifies Huge Potential Losses Absent Revised Pole-Attachment Policies

An economic analysis commissioned by Connect the Future assigns a hefty price tag to the potential delays that utility pole disputes could cause in the deployment of broadband infrastructure.

"Advancing Pole Attachment Policies To Accelerate National Broadband Buildout," by Professor Edward J. Lopez and Patricia D. Kravtin, asserts that "broadband deployment is being inhibited or outright stopped due to the lack of effective pole policy to address problematic behavior of certain utility pole owners affecting broadband provider access to utility poles."

According to their analysis, this "hold up problem" could lead to substantial economic losses: between $491 million and $1.86 billion for each month of delay that results.

As I highlighted in a February 2021 post to the Free State Foundation's blog, Charter Communications, Inc. (Charter) has announced plans to invest $5 billion, including $1.2 billion in subsidies won via the FCC's Rural Digital Opportunity Fund auction, to connect over a million locations currently without access to broadband.

That initiative, however, hinges upon reasonable and timely access to utility poles. And in a post last week to the FSF Blog, I drew attention to two FCC filings in which Charter described several ongoing disputes that underscore the need for the relief sought by NCTA – The Internet & Television Association (NCTA) in a July 2020 Petition for Expedited Declaratory Ruling: (1) greater clarity regarding the proper allocation of pole replacement costs between attachers and owners, and (2) use of the Commission's Accelerated Docket to resolve pole-related impasses promptly.

Consistent with the NCTA petition, the study's authors conclude that "policymakers need to facilitate the streamlining of equitable access and cost-sharing arrangements between broadband attachers and pole owners" in order to realize the full economic potential of ubiquitous broadband coverage.

Charter to Commission: Pole Disputes Threaten Timely Deployment of Broadband Infrastructure

In two recent FCC filings, Charter Communications, Inc. (Charter) offered further evidence that efforts to connect rural Americans to broadband hinge upon agency action ensuring access to utility poles "on reasonable timelines, terms and conditions." Specifically, the grant, whether through declaratory ruling or notice-and comment rulemaking, of the forms of relief requested by NCTA – The Internet & Television Association (NCTA) in a Petition for Expedited Declaratory Ruling submitted in July 2020 and denied by the Wireline Competition Bureau in January of this year.

As I highlighted in "Charter Announces Ambitious Project to Deploy Broadband to Over One Million Unserved Locations," a February 2021 post to the FSF Blog, Charter is investing $5 billion, including $1.2 billion in subsidies secured via winning bids in the Rural Digital Opportunity Fund (RDOF) reverse auction, to expand its network in 24 states. This will enable it to offer high-speed Internet access – specifically, service that meets or exceeds the FCC's current 25 megabits per second (Mbps) downstream and 3 Mbps upstream definition of "broadband" – to more than one million locations at present unserved.

When it unveiled its plans, Charter cautioned that "pole applications, pole replacement rules and their affiliated issue resolution processes are all factors that can have a significant impact on the length of time it takes to build into these rural areas."

And in conversations last week with representatives of the Wireline Competition Bureau and legal advisors to Chairwoman Jessica Rosenworcel and Commissioner Geoffrey Starks, Charter presented specific evidence of issues relating to the processing of pole applications that threaten its ability not just to connect rural Americans, but to meet deadlines associated with RDOF subsidies.

Maureen O'Connell, Charter Vice President, Regulatory Affairs, detailed one impasse, involving the Warren Rural Electric Cooperative Corporation (WRECC) in rural Kentucky, that jeopardizes its plans to provide broadband to over six thousand unserved locations:

At the permit processing rate currently proposed by WRECC, it would take 14 years to complete the permitting process for attachments to poles to reach these locations – about seven times longer than planned and double the maximum allowed to deploy these federal taxpayer dollars under RDOF. That means a child in kindergarten now will have graduated from high school before the permitting phase is complete.

Charter also identified pole-related disputes in California, Hawaii, and South Carolina and "expressed concern that some pole owners have competitive incentives to delay broadband deployment by attaching entities because they are themselves affiliated with broadband providers who are putative competitors to the attaching entities, including (in the case of WRECC) affiliates or business partners receiving RDOF support."

In July 2020, NCTA filed with the FCC a Petition for Expedited Declaratory Ruling (NCTA Petition) seeking relief in rural areas including: (1) various clarifications regarding the appropriate allocation of pole replacement costs between attachers and owners, and (2) timely resolution of pole-related disputes via the Commission's Accelerated Docket.

Free State Foundation President Randolph May and Director of Policies Studies and Senior Fellow Seth Cooper filed Comments in support of the NCTA Petition.

In a January 2021 Declaratory Ruling, the Wireline Competition Bureau did clarify that "utilities may not require requesting attachers to pay the entire cost of pole replacements that are not necessitated solely by the new attacher and, thus, may not avoid responsibility for pole replacement costs by postponing replacements until new attachment requests are submitted."

As a general matter, however, the Wireline Competition Bureau denied the NCTA Petition, concluding that "it is more appropriate to address questions concerning the allocation of pole replacement costs within the context of a rulemaking, which provides the Commission with greater flexibility to tailor regulatory solutions."

The picture painted by Charter underscores how important it is for the FCC to provide additional clarity and guidance with respect to the respective rights and responsibilities of pole owners and attachers.

In that regard, I point out that, in a statement to Telecompetitor, a self-described "puzzled" WRECC disputed Charter's allegations and expressed "hope than we can come to an agreement soon." Thus, it would seem that the parties involved are not on the same page. Prompt intervention by the FCC holds the potential to accelerate the deployment of network infrastructure.

In other words, the policy goal of rapid rural broadband expansion compels precisely the relief requested in the NCTA Petition: "expedited consideration under the Accelerated Docket."

As noted above, the Wireline Competition Bureau denied NCTA's request for declaratory relief because it believed that a rulemaking of general applicability would be the more appropriate vehicle. It is time to begin that process.

Supreme Court Order Ends Legal Challenge to FCC's Wireless Infrastructure Orders

On June 28, the U.S. Supreme Court denied certiorari in City of Portland v. FCC. Thus, the Court left undisturbed the August 2020 decision by the Ninth Circuit Court of Appeals that upheld most of the Commission's 2018 Small Cell Order, Moratoria Order, and One Touch Make-Ready Order. The Small Cell and Moratoria Orders defined limits on local governments' permitting authority regarding wireless infrastructure siting for small cells. And the OTMR Order established limits on local governments' discretion regarding pole attachments involving wireless networks. Those orders effectively removed local regulatory obstacles to deploying advanced wireless networks, including 5G networks.  

The Supreme Court's order is important because it leaves standing important circuit court precedent recognizing the preemptive authority of the FCC prohibit certain actions by state and local governments that effectively prohibit the offering of wireless communications services. That authority comes from the 1996 Telecommunications Act and the Constitution's Commerce Clause. The Court's order also leaves undisturbed the Ninth Circuit's rejection of Tenth Amendment-related anti-commandeering challenges to the Commission's rules regarding permitting fees, shot clocks for decisionmaking on permit applications, and moratoria on reviewing permit applications. The Ninth Circuit concluded (rightly) that the Commission's orders did not require state or local officials to take action to implement any federal regulatory scheme, but instead they secured a federal right to place and modify cell sites subject only to certain federal constraints. 

The Ninth Circuit's decision in City of Portland v. FCC was discussed in more detail in my September 2020 blog post. Free State Foundation President Randolph May and I also discuss the Ninth Circuit's decision as well as the Small Celland Moratoria Orders in our June 2021 Perspectives from FSF Scholars paper, "Wireless Infrastructure Reforms Rest on Solid Constitutional Foundations: Congress Should Preempt Local Obstacles to 5G Deployment." 

Charter Announces Ambitious Project to Deploy Broadband to Over One Million Unserved Locations

Yesterday Charter Communications announced a new multiyear, multibillion-dollar initiative to deliver gigabit broadband speeds to over a million customer locations in rural and other areas presently unserved.

Charter will invest $5 billion in this infrastructure expansion project, including $1.2 billion that it won in the Rural Digital Opportunity Fund (RDOF) Phase I reverse auction. This large-scale effort, which will extend Charter's fiber optic network in 24 states, is in addition to existing, privately funded buildout plans.

The project is expected to generate 2,000 new jobs and expand Charter's network mileage coverage by 15 percent.

In announcing the initiative, Tom Rutledge, Chairman and CEO of Charter Communications, explained that "[t]he pandemic has further highlighted the need for broadband availability and adoption and Charter is committed to furthering its efforts as part of the comprehensive solution needed to address these challenges."

One potentially significant external factor that could impact the timing of this project: utility pole permitting and "make-ready" processes.

Free State Foundation President Randolph May and Director of Policy Studies and Senior Fellow Seth Cooper submitted comments to the FCC in September 2020 in support of a Petition filed by NCTA – The Internet & Television Association seeking an expedited declaratory ruling regarding pole replacements and pole attachments.

Specifically, they argued that the Commission should:

• Prohibit utility pole owners in unserved areas from requiring broadband providers to bear the entire costs of new replacement poles;
• Place pole attachment disputes on its accelerated docket to expedite their resolution; and
• Clarify that it has authority to order pole owners involved in disputes involving unlawful delays and denials to complete pole replacements within specific timeframes.

Mr. Cooper posted to the FSF Blog on this topic, as well.

On January 19, 2021, the Wireline Competition Bureau released a Declaratory Ruling that, while declining to weigh in broadly on the issues presented in the Petition filed by NCTA, did narrowly "clarify that it is unreasonable ... for utilities to impose the entire cost of a pole replacement on a requesting attacher when the attacher is not the sole cause of the pole replacement."

Court Decision Will Advance 5G Network Deployment

On August 12, the 9th Circuit issued its decision in City of Portland v. FCC, in which it upheld three important Commission orders involving wireless infrastructure. The Commission's Moratoria Order, Small Cell Order (upheld except for provisions regarding aesthetic requirements), and its One-Touch-Make-Ready Order removed regulatory obstacles wireless infrastructure siting, particularly for small cells, and similarly removed obstacles for pole attachments involving cellular networks. 

Among other things, the 9th Circuit's decision rejected arguments that the Small Cell and Moratorium Orders are contrary to circuit precedent and agency precedent regarding Section 253(a)'s provision that "[n]o state or local statute or regulation… may prohibit or have the effect of prohibiting… telecommunications service." It wrote:

The FCC's application of its standard in the Small Cell and Moratoria Orders is consistent with Sprint [Telephony PCS, L.P. v. County of San Diego (2008)(en banc)], which endorsed the material inhibition standard as a method of determining whether there has been an effective prohibition. The FCC here made factual findings, on the basis of the record before it, that certain municipal practices are materially inhibiting the deployment of 5G services. Nothing more is required of the FCC under Sprint... 

The FCC has explained that [the agency's 1997 California Payphone Association Order] applies a little differently in the context of 5G, because state and local regulation, particularly with respect to fees and aesthetics, is more likely to have a prohibitory effect on 5G technology than it does on older technology. The reason is that when compared with previous generations of wireless technology, 5G is different in that it requires rapid, widespread deployment of more facilities… The differences in the FCC’s new approach are therefore reasonably explained by the differences in 5G technology. 

Free State Foundation President Randolph May spoke to the decision's importance to 5G deployment in an August 12 media advisory. Also, FSF President Randy May and I filed public comments with the FCC in the proceeding out of which the September 2018 Small Cell Order emerged.

FCC Ruling on Pole Attachments Will Clear Obstacles to Broadband Deployment

On July 29, the FCC's Wireline Competition Bureau issued a Declaratory Ruling to clarify to important points regarding the Commission's pole attachment rules. The ruling prohibits "blanket bans" by utility pole owners on attachments to any portion of a pole. It also prohibits utility pole owners from requiring attachers to give up their rights under the law and the Commission's rules without receiving corresponding benefits. The Declaratory Ruling is a follow-up to the Commission's 2018 Wireline Infrastructure Order. 

Blanket bans as well as attempts to coax attachers to give up their rights for no gain can significantly impede broadband infrastructure deployment. The FCC's Declaratory Ruling clears away those obstacles, and likely will facilitate speedier deployment to unserved Americans. The Commission should be credited for taking this action.  

As mentioned in my July 28 blog post, the Commission is now considering a worthy petition that, if adopted, would reduce barriers to attaching fiber cables to replacement utility poles in unserved areas and expedite resolution of pole attachment complaints. 

FCC Action on Pole Attachments Would Accelerate Broadband Access to Unserved Areas

On July 20, the FCC requested public comments on a NCTA petition for a declaratory ruling that would reduce barriers to attaching fiber cables to replacement utility poles in unserved areas. The requested ruling would require utility pole owners to share in the cost of new poles in those areas. It also would put pole attachment complaints in unserved areas on the Commission's accelerated docket for faster resolution. 

NCTA's proposal for a declaratory ruling on utility poles in unserved areas appears legally supportable. By granting the petition, the Commission can help accelerate deployment of broadband Internet networks and increase access to Americans who need it.

Section 224 of the Communications Act authorizes the FCC to "regulate the rates, terms, and conditions of pole attachments to provide that such rates, terms, and conditions are just and reasonable, and . . . adopt procedures necessary and appropriate to hear and resolve complaints concerning such rates, terms, and conditions." The Commission's implementing rules govern pole attachments in about 30 states. The remaining states have opted to regulate pole access and rates under their own rules. Also, Section 224 doesn't apply to utility poles owned by municipalities or cooperatives. Rules regarding pole attachments are necessary to keep utility pole owners from exercising monopoly power to charge above-market rates for leasing access to poles and, therefore, driving up consumer prices for services that depend on such access. 

When broadband networks are deployed to unserved areas, the existing utility poles often need to be replaced to allow for new attachments. Apparently, some utility pole owners try to push all the costs of replacing their poles onto cable operators or wireline telecommunications providers as a condition for allowing attachments. But saddling providers with the entire expense of replacing old poles is unreasonable and it significantly impedes efforts to reach unserved Americans. 

There are good reasons why owners should bear responsibility for some of the expense of replacing their utility poles. Utility poles have limited lifespans, and even in the absence of renters the owners eventually incur costs to replace old poles with new ones. Also, owners receive the benefit of increased revenues through upgraded poles that have expanded space for leasing. Recognition that owners ought to share in the costs of replacing their poles is consistent with Section 1.1408(b) of the Commission's rules, which provides: "The costs of modifying a facility shall be borne by all parties that obtain access to the facility as a result of the modification and by all parties that directly benefit from the modification" (emphasis added). 

Cable operators and wireline telco providers should be obligated to pay only the incremental costs that they cause in hastening the replacement of old utility poles with new ones. The Commission ought to adopt a formula for apportioning pole attachment replacement costs, and thereby reduce a significant barrier to broadband deployment in unserved areas.  

Additionally, the Commission can facilitate faster deployment to Americans who lack access to broadband Internet services by putting pole attachment complaints involving unserved areas on the agency's Accelerated Docket. The Accelerated Docket includes a 60-day timeframe for resolving disputes more quickly. This matter is clearly within the Commission's discretion, and it is a common sense measure for speeding up network deployment. 

By taking action on NCTA's pole attachments petition, the Commission can take a modest, but important, step to reduce infrastructure cost barriers that otherwise impede bringing broadband more quickly to all Americans.

Connolly Paper Analyzes Excessive Pole Attachment Rates

Dr. Michelle Connolly, a former Chief Economist at the FCC and a current member of the Free State Foundation's Board of Academic Advisers, has published a paper titled "The Economic Impact of Section 224 Exemption of Municipal and Cooperative Poles." Muni and co-op pole owners are exempt from rate limits established under Section 224 of the Communications Act. Dr. Connolly's paper found that municipal and electric co-op pole attachment rates are more than double or triple rates charged by investor-owned utilities. 

As Dr. Connelly explains: 

Because local regulations require that firms attaching to poles use existing utility facilities rather than install their own, removal of the Section 224 exemption for Coops and Munis is needed to prevent them from charging monopoly level pole attachment rates. Moreover, making these pole owners subject to the general Section 224 framework would create greater consistency in expectations over future pole attachment rates, reduce uncertainty and help increase overall investment in all communications networks that must rely on pole attachments. Such changes can be expected to offer particular benefits to rural areas where on average more poles must be passed to reach each consumer, and to competitive fairness as Coops and Munis would be prevented from using excessive rates which skew investments by broadband providers away from the areas in which the Coops and Munis are located. 

This issue is even more important now that a number of municipalities and electricity co-ops have expressed interest in moving into the broadband market. Electricty co-ops, in particular, have sought to not only provide broadband Internet service but to obtain financing through taxes, bond issues, or subsidies, including the Universal Service Fund. A number of states have passed or considered legislation going that would authorize their electric utilities to enter the marketplace as a broadband Internet service provider. 

I asked NCTA's Executive Vice President James Assey about this issue at the Free State Foundation's Eleventh Annual Telecom Policy Conference, held in Washington D.C. on March 26, 2019. Here is Mr. Assey's response:

With respect to electricity co-ops, the one glaring issue that really needs congressional action in addressing is the fact that they still have an exemption from the pole attachment regime that was set up. Back at the time the exemption was created, the thought was that pole attachment rates charged by municipal providers or co-ops were very low and that there were going to be incentives that they would stay low. And we have seen in actual practice that flipped on its head. It is hard for me to imagine a Congress and an FCC allowing co-ops to enter the business of broadband and being able to charge super-competitive rates for pole attachments that are different from the federal framework. So if co-ops are going to go into the business, that exemption needs to go. 

Dr. Michelle Connolly's paper is worth reading and considering. It is available online here.

Message to States: Don't Let High Pole Attachment Rates Become Barriers to Broadband

State and local governments have important policy roles to play in spurring deployment of next-generation broadband to their communities. One important thing that states can do to incentivize broadband growth is prevent unnecessary barriers to investment by keeping pole attachment rates low. For example, as explained below, a bill now pending in the North Carolina legislature dealing with what may seem like the arcane subject of "pole attachment rates," in fact, could adversely impact broadband deployment to the detriment of the states' citizens.

High costs charged to providers for leasing access to utility poles deter broadband deployments and inevitably drive up consumer prices. Local governments or utilities should be able to recover costs of maintaining utility poles. But the rates charged for pole attachments should be as low as reasonably possible. Keying pole attachment rates to the FCC's rate formula offers a sensible way for states to keep rates low while ensuring cost recovery for utility pole owners.

Congress and the FCC have recognized that local monopoly in ownership or control of poles puts utilities in a position to extract monopoly rents through unreasonably high rates. Indeed, the FCC's National Broadband Plan (2010) found that the cost of deploying a broadband network depends significantly on the costs that service providers incur to access poles and other infrastructure.

Section 224 of the federal Communications Act authorizes the FCC to "regulate the rates, terms, and conditions of pole attachments to provide that such rates, terms, and conditions are just and reasonable, and . . . adopt procedures necessary and appropriate to hear and resolve complaints concerning such rates, terms, and conditions." However, states retain broad discretion over pole attachment rates in many instances. Under Section 224's "reverse presumption" provision, states which certify that they regulate pole attachment rates are not preempted by the FCC. Further, Section 224 doesn't apply to utility poles owned by certain entities, like municipalities or cooperatives.

So how can states ensure that pole attachment rates are reasonable, and thereby avoid high rates that deter broadband growth? Setting rate standards can be a complex matter. Fortunately, even where states assume responsibility for setting pole attachment rates, states can consult the FCC's formula as a reliable guide for keeping rates low and reasonable. 

The FCC's formula for determining pole attachment rates for cable operators balances the need to keep rates low with the need to ensure that utility pole owners recover their costs. In 1987, the U.S. Supreme Court affirmed the FCC's formula for setting rates that are just, reasonable, and fully compensatory. For that matter, in 2011 the FCC revised its attachment rate standards for telecommunications providers to generally align with rates for cable providers. Of course, traditional "cable" and "telecommunications" providers now provide broadband Internet services through their upgraded networks. So pole attachment rates have a significant impact on the cost of delivering broadband.

That the FCC's Section 224 pole attachment formula is recognized for setting generally low rates makes a recent proposal to change one state's law troublesome. Now pending in the North Carolina House of Representatives is Senate Bill 88, a bill that was passed by its state's Senate. One of NC Senate Bill 88's so-called "technical changes" would eliminate a provision in North Carolina law requiring that pole attachment rate-setting include consideration of the FCC's Section 224 pole attachment formula. Existing North Carolina law does not mandate the federal formula as such. But it wisely requires the FCC's Section 224 formula to be considered in determining reasonable rates. By proposing to remove that provision from state law, the obvious inference is that NC Senate Bill 88 is intended to produce higher pole attachment rates.

State legislators unused to dealing with a subject like pole attachment rates can be forgiven for not realizing that such a "technical change" could negatively impact broadband deployment and network upgrades for their communities. NC Senate Bill 88 deserves another hard look by state legislators with the impact on broadband deployment in mind.  

Why make broadband networks more costly to deploy and upgrade? Why adversely impact citizen consumers with potentially higher prices by raising infrastructure costs? And why not at least consider an FCC-approved and Supreme Court-affirmed formula in trying to carry out a complex process? Adoption of low pole attachment rates – or at least serious attention paid to Section 224's lower rate standard – best promotes continued expansion of broadband. Accelerating broadband is in the best economic and social interests of every state and local community. This is certainly the case in rural areas where broadband penetration and capabilities stand the most in need of improvement.

States should use the FCC's Section 224 pole attachment formula as a valuable reference point for setting pole attachment rates. By doing so, states can minimize cost barriers to broadband expansion and avoid adverse consequences for their citizens' ability to pay for broadband.